The following information pertains to the acquisition of a six-wheel truck by Sol Barr, a self-employed contractor.
- Cost of original truck traded in: $20,000
- Book value of original truck at trade-in date: $4,000
- List price of new truck: $25,000
- Trade-in allowance for old truck: $6,000
- Business use of both trucks: 100%
The basis of the new truck is
a. $27,000
b. $25,000
c. $23,000
d. $19,000
Answer: C
CPA Exam
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